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Rent-Extracting Tariffs and the Management of Exhaustible Resources


  • James Brander
  • Slobodan Djajic


The paper examines the interaction between a resource-exporting and a resource-importing country. The exporter chooses an optimal depletion rate and decides the allocation of the extracted resource between exports and domestic use. Optimal management from a national view entails inefficiency from a global perspective because too little resource is exported since the supplying country exploits its monopoly power. The importing country, however, has incentive to extract some of the resource rent with a tariff. The optimal tariff induces greater overall inefficiency.
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Suggested Citation

  • James Brander & Slobodan Djajic, 1983. "Rent-Extracting Tariffs and the Management of Exhaustible Resources," Canadian Journal of Economics, Canadian Economics Association, vol. 16(2), pages 288-298, May.
  • Handle: RePEc:cje:issued:v:16:y:1983:i:2:p:288-98

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